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The Department of Finance (DOF) will use USD80 million (about PHP4 billion) of the World Bank’s (WB) USD500 million standby credit line to support the national government’s disaster relief and rehabilitation activities in provinces hit by Typhoon Odette this week.

The World Bank’s 4th Disaster Risk Management Development Program with a Catastrophic Deferred Drawdown Option (CAT-DDO4), according to Finance Secretary Carlos Dominguez III, will provide the government with immediate access to funds for its ongoing efforts to aid the recovery of “Odette”-affected areas.

“This week, the Department of Finance will draw USD80 million from a World Bank catastrophe finance loan to cover the amount in the 2021 budget,” Dominguez added.

In the first week of January, when the loan cover would be available in the 2022 national budget, the Philippine government will draw another USD120 million from the same WB standby loan facility, he added.

Dominguez made the statement in response to Senate Minority Leader Franklin Drilon and Senator Juan Edgardo Angara’s calls for the government to conduct a cash sweep of unspent monies and savings in state coffers to fund relief and rehabilitation efforts in areas hit by “Odette.”

To trigger the release of funds available under the USD500 million WB standby loan program, the president must declare a state of calamity or a public health emergency.

President Rodrigo Duterte declared a state of calamity in six areas hit by “Odette” on December 21: 4-B (Mimaropa), 6 (Western Visayas), 7 (Central Visayas), 8 (Eastern Visayas), 10 (Northern Mindanao), and 13 (Northern Mindanao) (Caraga).

The CAT-DDO4 intends to increase the Philippines’ institutional ability to manage risks from climate change, natural disasters, and disease outbreaks, according to the Department of Foreign Affairs.

The WB Board approved this standby lending facility on November 17, 2021, and the WB and the Philippines, represented by the DOF, signed the loan agreement on November 29, 2021.

As of December this year, the CAT-DDO4 had an accessible balance of USD497.5 million, net of a 0.5 percent front-end fee.

According to the Department of Finance, the CAT-DDO4 is part of the Philippines’ Disaster Risk Financing Insurance strategy, which aims to maintain sound fiscal health at the national level, develop sustainable financing mechanisms for local government units, and minimize the impact on the poorest and most vulnerable.

In 2018, the Philippines requested financing from the World Bank’s USD500 million CAT-DDO2 to aid in disaster relief and reconstruction activities in Luzon provinces hit by Typhoon Ompong.

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